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Markets

UK sees record 53bn pound demand for new 40-year bond

The 0.5% October 2061 gilt was priced to pay a yield of 0.5852%, the same yield as the 4% January 2060 gilt . This
19 May 2020
  • The 0.5% October 2061 gilt was priced to pay a yield of 0.5852%, the same yield as the 4% January 2060 gilt . This represented pricing at the top end of initial guidance, as is typical at British government bond syndications.
  • The United Kingdom Debt Management Office (DMO) said Tuesday's syndication saw the highest volume of orders for a gilt with a long maturity.
  • Deutsche Bank, Morgan Stanley, NatWest Markets and UBS acted as joint leads on Tuesday's transaction.

LONDON: Britain raised 7 billion pounds ($8.6 billion) at the launch of a new 40-year bond on Tuesday, which attracted a hefty 53.1 billion pounds of demand from investors at the syndication, a record for a gilt of this maturity.

The 0.5% October 2061 gilt was priced to pay a yield of 0.5852%, the same yield as the 4% January 2060 gilt . This represented pricing at the top end of initial guidance, as is typical at British government bond syndications.

The launch of a new 10-year gilt via syndication last week - part of the government's planned surge in borrowing to help pay for its coronavirus response programme - drew record orders worth more than 82 billion pounds.

The United Kingdom Debt Management Office (DMO) said Tuesday's syndication saw the highest volume of orders for a gilt with a long maturity.

Demand for British government debt received a major boost in March when the Bank of England committed to buying an extra 200 billion pounds of assets, mostly gilts, to support the economy through the coronavirus crisis.

Britain has sold 100 billion pounds of debt in the past seven weeks to fund increased government spending on measures to soften the economic pain of what threatens to be its sharpest economic downturn in more than 300 years.

"The strength of support shown today - and more widely - offers me reassurance that, despite the unprecedented scale of the current financing requirement, the DMO, working with the market, can continue to meet these challenges successfully," DMO chief executive Robert Stheeman said.

Deutsche Bank, Morgan Stanley, NatWest Markets and UBS acted as joint leads on Tuesday's transaction.